Asia Markets recap: Caution! U.S. jobs ahead

April 3, 2014, 7:13 PM ET

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Welcome to the Asia Markets live blog, a running account of what the region’s stock markets are doing, along with other news. The Dow industrials end flat on Thursday, and Asian equities are seeing similar caution today as investors around the globe wait for the latest word on U.S. employment.

Capital Economics puts it this way: “The measures unveiled in Beijing last night [Wednesday] are simply reheated versions of previous announcements that shouldn’t change the outlook for growth. This suggests that officials are still sanguine about the economy and haven’t – contrary to some initial reaction – started again to prioritize growth over all else.”

In a later note, Perpetual market research chief Matt Sherwood offers a very similarly worded critique: “China announced a minor stimulus plan, but the details seem to be fueled-up versions of previous announcements, which are unlikely to support the world’s second-largest economy to any major degree. This suggests that Chinese officials are still sanguine about the economy.”

So “still sanguine” seems to be the buzz-phrase for those underwhelmed with the plan. And as if on cue, the People’s Bank of China issued their quarterly statement yesterday, indicating that they are in fact pretty sanguine.

The Chinese economy remains within a “reasonable range,” the PBOC policy makers said, adding that they would keep the financial system liquid enough to ensure reasonable growth and access to credit.

Australian stocks are staggering in and out of positive territory this Friday morning (S&P/ASX 200 is currently flat at around 5,409), but several analysts and media reports suggest Sydney is just biding its time ahead of the always-significant U.S. monthly jobs report. (Read the MarketWatch jobs preview here.)

And sure enough, many of the most-widely-held shares are showing very little movement: BHP Billiton is up 0.1%, NAB and ANZ are down 0.1% each, Telstra is up 0.1%, and so forth.

Even construction-materials firms Boral and CSR, which are making news with plans to team up in a new brick-making joint venture, aren’t seeing too much of a bang for their shares, with with CSR rising 0.1% and Boral with a more substantial 0.6% advance.

Of course, some names are seeing more sizable moves: Aluminum prices hit a four-month high overnight, sending shares of Alumina … down 1.2% to undo their 0.8% advance in the previous session.

Also showing some life: Uranium miner Paladin Energy is up 3.8%, Billabong is up 1.9%, and Fairfax Media is up 2.4%.

Looking a little farther down the road, Rivkin global investment manager Timothy Radford sees some upside in the long term.

“The Australian market has tracked steadily higher ever since hitting support levels at 5,300 point mid-March. This run looks sustainable in the near term, as buying momentum across the Big Four banks gains traction and the big miners recover from recent China slowdown fear driven selling,” he writes in a note out this morning.

The yen is a little softer, and so are Japanese stocks. In the early minutes, Tokyo is holding on to a modest deficit, with the Nikkei Average down 0.2% (it rose 0.8% yesterday) and the Topix down 0.1% ahead the always-a-big-deal U.S. jobs report later in the global day.

The dollar is buying 103.91 yen, up a bit from ¥103.87 at this time yesterday.

Among the movers, convenience-store maven Seven & I is down 1%, failing to get love for its 27% rise in net profit for the just-ended fiscal year, with a forecast gain of about 5% for the current fiscal year.

And remember those “Disco Sucks” t-shirts from the 1970s? Well such is not the case for tool-maker Disco Corp, at least according to a Nikkei report saying its fiscal-year operating profit will beat forecasts. All the same, Disco shares are grooving 1.2% lower this morning, not too surprising after they rose almost 6% so far this week.

It’s a similar story for Taisho Pharma, with its stock 2.1% lower despite a separate Nikkei report promising a record operating profit for last fiscal year. (Although in this case, Taisho has traded modestly weaker this past week.)

Meanwhile, the auto sector is looking bi-polar in morning moves, with Nissan up 0.3%, and Mazda up 1.5%, but Honda down 0.7%, and Toyota down 0.3% as a key vote at two Toyota plants in Canada on whether to unionize is delayed.

And in other union-related news, Bank of Tokyo-Mitsubishi UFJ will be the first major Japanese lender to allow a large-scale union, according to the Nikkei, though the market seems fine with this, as shares of parent Mitsubishi UFJ Financial are flat.

After a five-day climb, Hong Kong stocks are catching their breath this morning, with the Hang Seng Index flat (and the Shanghai Composite Index flat too) ahead of the U.S. jobs report due after the close.

On the downside, shares of index heavyweight Tencent Holdings are seeing further losses, sliding another 4%. The Internet giant touched a record high in early March, fueled by a bullish outlook for China’s growing e-commerce and mobile markets. However, shares have retreated since then amid concerns that valuations may be too high, with Tencent sinking 12.5% over the past month.

Other tech names are sliding along Tencent, with software firm Kingsoft Corp. dropping 4.6% and NetDragon Websoft down 1.5%.

And China’s largest carrier of crude oil and coal — China Shipping Development — is rallying 4.9%, after it issued an optimistic earnings forecast for the first quarter of this year due to a rebound in petroleum-shipping prices.

It has seemed for so long that Macau just can’t lose, as the world’s biggest gambling market bounced from one revenue record to another. The March revenue numbers out this week — though merely “in line” with expectations — were enough to help some names to additional gains on Thursday.

Today, though, it’s time for some pullback, as Hang Seng Index components Sands China and Galaxy Entertainment fall 1.3% and 1%, respectively, while outside the index, MGM China is off 1.4%, Wynn Macau is down 2.3%, and SJM is off 0.7%.

At first glance, the March results show that Beijing’s anti-corruption campaign may indeed be taking a bite out of revenue from the high-end, baccarat-playing mainland Chinese VIPs. VIP-gaming revenue last month was just 3% higher than the year before, although Barclays points out that volume grew a more respectable 12% — so maybe the big spenders are still coming to Macau, but they’re just not spending as freely as they might otherwise.

That said, so-called “mass table” revenue enjoyed an impressive 40% year-on-year rise, with the Barclays team noting that the segment also carries a higher margin.

“With mass-table revenues seeing much stronger growth than the VIP segment again, we look for strong revenue growth, as well as EBITDA-margin improvement, for the industry as a whole” in the first quarter of the year.

If you’re looking to invest, Barclays tips Sands China and Galaxy to report the largest revenue growth for the January-March period, while SJM will be the weakest.

Meanwhile, Andrew Sullivan at Kim Eng Securities reports that Sands may reduce the number of junkets bringing gamblers to its doors.

“Historically, the junket operators had been a key driver to the casino business, at least for high-end gamblers,” writes Sullivan in a note Friday. “This move by Sands China supports my view that the mass-market operators like Sands, Galaxy, [and] Shun Tak are going to be the best play on Macau.”

Soaring bad-loan levels at Chinese banks are worrying the nation’s top banking regulator, which is now planning regional and national stress tests to gauge the impact of “unfavorable situations” on China’s financial system, or so says a state media report out today.

Likewise, the ratio of non-performing loans to total lending has also edged up to 1% of banks’ total porfolio in 2013, up from 0.95% in 2012.

Giving internal guidance on risks controls, the CBRC reportedly told the sector that it needs to increase its bad-loan provisions and build further capital reserves to manage risks.

Specifically, banks need to watch credit risk from loans to those industries facing overcapacity problems (such as property and steel), as well those for local government financing vehicles, according to the report.

Over on the mainland, the Shanghai Composite Index closed 0.7% higher at 2,058.84. The Shanghai markets are scheduled to close on Monday for the Qingming Festival holiday (aka Tomb Sweeping Day) and resume trading on Tuesday.

However, Hong Kong Exchanges & Clearing (HKEx) extended gains by 2.9%, after reports said the exchange has been in talks with mainland bourses for widening foreign investors’ access to mainland stock markets. The HKEx said in a statement on Friday that its discussions with the mainland counterparts about “mutual market connectivity initiatives” are still going on, but no agreement has been made yet.

Meanwhile, shares of Chinese milk producer Yuanshengtai Dairy Farm soared 16.4% to 1.56 Hong Kong dollars (about 20 U.S. cents), after BNP Paribas reportedly set the first target price for the stock at HK $2.83. United Laboratories International Holdings also jumped 5.1% to HK $5.60 after Goldman Sachs raised the target price for the stock.

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